Exclusive - Niger audits Areva uranium mines, seeking better deal

NIAMEY Fri Sep 20, 2013 5:09pm BST

Anne Lauvergeon (C), head of French nuclear firm Areva, arrives at the Niamey airport after her visit in Arlit October 1, 2010. REUTERS/Simon Clement

Anne Lauvergeon (C), head of French nuclear firm Areva, arrives at the Niamey airport after her visit in Arlit October 1, 2010.

Credit: Reuters/Simon Clement

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NIAMEY (Reuters) - Niger has ordered an audit of French nuclear group Areva's (AREVA.PA) uranium mines in the West African country as it presses for a better deal in talks over a new long-term contract, Mining Minister Omar Hamidou Tchiana told Reuters.

Areva's two mines in Niger - Somair and Cominak - produce the fuel for roughly one-third of France's nuclear power, providing some of the cheapest electricity in the West.

Niger, a former French colony and one of the world's poorest countries, has long complained it does not reap enough benefits from these resources.

With the mines' 10-year contract coming up for renewal at the end of this year, Niger wants to increase its tax take and is calling on state-controlled Areva to make infrastructure investments, including a new road to the remote mining region of Arlit, more than 1,000 km north of the capital Niamey.

"We respect Areva as a strategic partner but we want a balanced partnership," Tchiana said in an interview in his office. "We are going to make sure that Niger benefits from the extraction of uranium."

France relies for roughly three quarters of its electricity on nuclear reactors, which Areva builds and supplies with fuel. International uranium prices, however, have slumped after the 2011 Fukushima disaster in Japan, squeezing Areva's earnings.

The company, 87-percent owned by the French state, made a loss of 99 million euros last year, but expects to make an operating profit of more than 1.1 billion euros this year, helped in part by its uranium mining business.

Tchiana said Niger was not looking to raise its stakes in the Somair or Cominak mines. It holds 36.4 percent in Somair, which produces roughly 3,000 tonnes of uranium a year, and 31 percent in Cominak, which has an annual output of 1,500 tonnes.

"Our objective is to reduce the cost of uranium production so Niger can benefit, not only in terms of taxes but from dividends as a shareholder," Tchiana said. "We have an audit underway which will tell us what needs to be done."

Areva, which has been mining Niger uranium for four decades, has a 63.6 percent stake in Somair and 34 percent in Cominak.

Extractive industries watchdogs, including the local branch of Publish What You Pay, have accused Areva of a lack of transparency in its revenues and costs in Niger.

Asked if he believed mining companies were accurately stating their costs, Tchiana said: "The audit should reveal that ... It will be ready before the end of this month."

President Mohamadou Issoufou, elected in 2011, has said he wants to dramatically increase state revenues from uranium, which accounted for 5 percent of the 1.4 trillion CFA franc ($2.9 billion) budget last year.

"We think that 20 percent should be the minimum," Tchiana said. "Natural resources must serve the interests of our country."

INFRASTRUCTURE INVESTMENTS

A spokesman for Areva, which also mines uranium in Canada and Kazakhstan, declined to comment on the contract talks. CEO Luc Oursel said in July talks were continuing productively.

Previous Niger governments have struggled to substantially increase the state's take from uranium and details of the 2003 mining contract have been kept confidential. The IMF estimates Niger's gross domestic product at around 5.5 billion euros, only just over half of Areva's revenues of 9.3 billion in 2012.

Former president Mamadou Tandja succeeded in 2006 in roughly doubling the official uranium price, used to calculate profits and tax revenues, and ended Areva's monopoly on uranium extraction in 2007 by inviting in China's SinoU, which now operates the Somina mine.

But he was toppled in a military coup in 2010, after trying to change the constitution to seek a third term.

Development of the uranium sector has been complicated by insecurity in northern Niger. The Somair mine was targeted by Islamist suicide bombers in May, shutting down production for over a month, in retaliation for a French-led military operation against an al Qaeda-linked enclave in neighbouring Mali.

Areva's uranium mining business had a strong first half, with sales up 26 percent to 813 million euros as the group signed long-term contracts with U.S. and Asian utilities.

Niger now wants Areva to pay for the reconstruction of the road to Arlit. The road, in poor condition, is used by trucks carrying uranium concentrate to the port of Cotonou in Benin - a distance of more than 2,000 km - from where it is shipped, much of it to Areva's Comurhex conversion plant in southern France.

"Everywhere in the world, it is the mining companies which build the transport infrastructure," Tchiana said. "It is the company which deteriorates this road, so it should build it."

The minister also warned Niger would press for financial compensation if there were further delays to Areva's Imouraren uranium mine. The site, with an estimated capacity of 5,000 tonnes a year, is due to open in 2015 after years of setbacks and catapult Niger to become the world's No. 2 uranium producer.

With Issoufou due to run for re-election in 2016, his government says any further delays would be unacceptable.

"For us, 2015 is non-negotiable ... The president made campaign promises based on the revenues from this mine," Tchiana said. "If there is a delay which is not Niger's fault, the company will have to assume the cost."

Areva and Niger have yet to agree on a new production price for uranium this year, as the company presses for a cut, and have rolled over last year's price of around 73,000 CFA francs per kilo. Tchiana said he hoped for a deal at talks next week.

"There will not be a big change. At least that is what we expect," Tchiana said. "They must see uranium as a strategic investment, not just a commercial product."

($1 = 485.5520 CFA francs)

(Additional reporting by Geert de Clercq in Paris; Writing by Daniel Flynn; Editing by Mark Potter)

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